It's important to reserve at least some of your Social Security check to cover these sometimes unexpected costs.Ĭonsider saving an additional 20 percent of your Social Security benefits for medical spending. But you might still suffer health setbacks. Health expenses are one cost you have little control over. (See also: How an HSA Could Help Your Retirement) The Bureau says that adults 74 and older spend an average $5,708 a year on health care. According to the Bureau, adults from the ages of 65 to 74 spend an average $5,956 a year for medical care. The numbers from the Bureau of Labor Statistics bear this out. ![]() Medical expensesĭepending on your health, medical costs could be a significant expense as you age. But setting aside 20 percent or so of your monthly Social Security check for food should suffice. You can eat out less often and cook at home more, which would reduce your food expenses. You do have control over this expense, of course. Make sure, then, to reserve part of your Social Security check for groceries and meals out. This makes sense: You have to eat, whether you're working or not. ![]() The Bureau of Labor Statistics reported that seniors from the ages of 65 to 74 spend an average $6,303 a year on food. (See also: 5 Countries Where You Can Retire for $1,000 a Month) If housing is a significant expense, though, you might consider devoting 60 percent or more of your Social Security check to covering it. If you live in a home with a mortgage that's been paid off, you obviously won't need to spend as much of your checks on housing as you would if you were still paying a mortgage. How much that percentage is will depend on how much you are spending on housing. It might make sense to devote a set percentage of every Social Security check to help cover your housing expenses. This means that the average amount that retirees spend on housing would consume most of your Social Security income each year. If you receive the average Social Security check of $1,360 a month, you'll receive $16,320 a year. Seniors from the ages of 65 to 74 spend an average $15,838. Housing often remains a significant expense for retirees, with the Bureau of Labor Statistics reporting in March 2016 that seniors age 55 and older spend an average $16,219 a year on housing. Or, maybe you'll spend your retirement years in assisted living. You might choose to rent during your retirement years. Ideally, you'll enter retirement without a mortgage payment. (See also: 6 Ways You Can Cut Costs Right Before You Retire) Housing Once you determine how important your benefits are to your monthly income stream, it's time to calculate how much of your Social Security check you should devote to each of your main expenses. If it accounts for just 20 percent, you'll have a bit more leeway. If Social Security accounts for 70 percent of your monthly income, you'll have to be especially careful how you spend it. Then, determine how much of this income comes from Social Security benefits alone. The first step in determining how to best spend Social Security benefits is to calculate your monthly income from all sources. (See also: 6 Smart Ways to Boost Your Social Security Payout Before Retirement) There's always a need for a budget That's why it's so important for retirees to create a budget for their Social Security benefits and determine the best way to spend such a significant portion of their monthly earnings. The administration says that Social Security benefits represent about 34 percent of the income of the elderly. This doesn't mean, though, that these Social Security dollars aren't important. And for most retirees, Social Security benefits are just one source of income, with many supplementing their checks with money that they've saved in 401(k) plans, IRAs, and other savings vehicles. ![]() The average retired worker earns a monthly Social Security check of $1,360, according to the U.S. United_states_treasury_government_check.jpg ShareThis
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